Obama, WH come out swinging after Romney ad promises to … make China play by the rules; Update: Romney campaign responds

posted at 11:21 am on May 25, 2012 by Ed Morrissey

It was an innocuous moment in an ad with at least one tougher attack line, but it certainly got the attention of the White House and the Obama campaign, as Olivier Knox discovered. At the 14-second mark of the ad released yesterday by the Romney campaign, the announcer says that Mitt Romney “stands up to China on trade and demands they play by the rules” on Day 1 of his presidency. That’s a lot less direct a criticism than what precedes it in the ad — Romney’s promise to “end Obama Era of Big Government” — and yet from the reaction one might think that Team Romney had accused them of attacking motherhood:

Carney, who frequently shies away from questions about the campaign, referred reporters to Romney’s book, “No Apology: The Case for American Greatness.” He said the former Massachusetts governor had “attacked the president for standing up for American workers and businesses by enforcing trade law against China, even calling it ‘bad for the nation and our workers.'” (Carney did not use the book’s title. But in a separate press release, the Obama campaign cited the same quote and did so).

“The fact that Governor Romney is criticizing the president from one side despite having occupied the other side of the issue I suppose is not very surprising,” Carney said.

(Stop and consider that the totality of the Romney ad’s comment on the issue is a pledge that on his hypothetical first day in office “President Romney stands up to China on trade and demands they play by the rules.”)

This demonstrates two problems for the Obama administration. As Knox notes in his report, Obama has come under considerable pressure to define China as a currency manipulator, a charge on which everyone agrees, but which the Obama administration has avoided thus far. When running deficits this large, Obama can’t afford to anger one of the more reliable creditors we have. The manipulation does put the US at a disadvantage, though, and it does cost jobs. In places like Ohio and Pennsylvania, getting tough on China is a popular theme, and to the extent that Romney can paint Obama as weak in the relationship, he could do real damage to Obama. That’s why this rather innocuous line got not one, not two, but three separate pushbacks in the span of a few hours from the White House and Team Obama.

Secondly, it shows a little of the desperation that has begun to afflict the Obama camp. Their one big attack strategy, Bain Capital, has turned into a pratfall, with Obama as the joke. They need a new line of attack against Romney, and the opposition in his book to the Obama tariffs on Chinese tires might look like a more profitable point — but not if Romney can define Obama as weak on China first. Unfortunately, Obama can’t afford to get any tougher with China thanks to the massive deficits he’s running as President, and that means Romney can attack on both spending and jobs fronts in the way Obama has handled the relationship with China.

In a semi-annual report on exchange rate policies, Treasury said that China’s currency remains “significantly undervalued” and “further appreciation of the [yuan] against the dollar and other major currencies is warranted.”

But, the report said, based on the strengthening of the yuan since 2010, the decline in China’s current account surplus, and China’s commitment to strengthen its currency, Beijing did not meet the standards under law as a currency manipulator.

The value of China’s currency could be a campaign issue in the battle for the White House.

Romney said that if he was elected he would formally name Beijing a currency manipulator on his first day in office and was willing to apply tariffs on Chinese goods if necessary to force appreciation.

The Romney campaign sent over this statement:

“For American businesses and workers who want to compete on a level playing field in the international economy, the choice has never been clearer. Just this Thursday, Governor Romney reiterated his commitment to demand from Day One that China play by the rules. On Friday, President Obama tried to hide his administration’s decision not to acknowledge that China manipulates its currency with a delayed Memorial Day weekend announcement. We need a President who understands the principles of free enterprise and will stand up for them around the world.” – Romney for President Policy Director Lanhee Chen

Looks like Team Romney has really gotten inside Team Obama’s heads on this one.

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Attacking Bain didn’t work…so the geniuses think America will get behind them defending China…really? They think the American people have a soft spot for China?
Oh man, this is going to be easier for Mitt than I ever imagined…

One of his first tax increases was the 30% tariff he put on tires made in China. I believe it was September 2009. The price of the BF Goodrich tires for my F150 went up $100 each the next day. Total sop to the unions.

How about we tell China to repay the monies,donations, loans, and expenditures, that we paid to remove the Japanese from China. With reasonable interest it should come to a bit north of $1Trillion. I say call the loans and it’s a wash and we start from scratch.And that’s the monies prior to 7 December.

This demonstrates two problems for the Obama administration. As Knox notes in his report, Obama has come under considerable pressure to define China as a currency manipulator, a charge on which everyone agrees, but which the Obama administration has avoided thus far. When running deficits this large, Obama can’t afford to anger one of the more reliable creditors we have.

Romney should answer this by promising to reduce the deficit so that America doesn’t have to worry about angering its “creditor”.

China is a huge nation with four times our population and nuclear weapons, so it cannot be bullied by anyone. But our huge debts financed by China are a weakness which China will not hesitate to exploit.

Romney should play back Obama’s 2008 ad about G.W. Bush “borrowing on the credit card at the Bank of China”, then tell people that Obama has borrowed more at the “Bank of China” in four years than Bush did in eight years, and if we want China to be honest in its trade policies, WE need to cut spending and stop borrowing money from China.

..has a nice ring to it. Just like President Gingrich, President Santorum, even President Paul.

Refreshing change.

The War Planner on May 25, 2012 at 11:28 AM

Exactly…we had our pick this cycle, any one of them (maybe not Paul) could have made it…I have never seen a campaign like Obama’s implode so quickly.
Any worse, and Obama is out…and we don’t want that.

China has been undervaluing their currency by as much as 40% for over a decade. Not one President during that time has done anything about it.

This has been an issue for years, and no one since Reagan has got it right.

I consider myself a pretty extreme conservative, but the “Free Trade” wing of the party needs to die. “Free Trade” only looks good in an economics class. In the real world there is no such thing.

We need to be demanding “Fair Trade” and we need to hit foreign manufacturers for not playing by the same rules that we bind ourselves to with these “Free Trade” Agreements. We have set the US up for other countries to send us their goods for cheap, while at the same time not allowing us to send products to their countries with the same benefits. There already is a global trade war, and Romney understands this. This is my favorite Romney issue, and I see it as his biggest strength. Free Trade, becuase what we have right now is certainly not Fair.

Jay Carney needs to figure out whether or not he is the press secretary or campaign spokesperson. Not only is it incredibly unprofessional, over time it muddles the message when jug-ears is trying to be Presidential because you don’t know which hat Carney is wearing.

China has huge problems that are about to come out from the cracks in the authoritarian slab. A dustbowl due to insane agricultural policy. Factories set up, used for a year or two and then abandoned without being paid off… and then the cronies getting more cash from banks that feel they no longer need to respond to the central government, or even basic math.

A demographic implosion that will hit as soon as the older echelon of workers begins to move on from their living life station to a final resting place… there aren’t enough people to fill those jobs under the one-child policy and not enough farmers to grow food if it could be grown in their dustbowl.

Dumping of toxic waste into rivers. Building cities to absorb savings and then those cities will be occupied by no one as they aren’t made to do anything.

Having a simple fishing village toss out a plan to take its land, and then fighting off the regime and forcing the regime to the negotiating table. A Maoist comeback in western provinces who probably don’t look to kindly on any form of capitalism, crony or otherwise.

Foxconn, one of the major industrial slave labor company town employers start to close factories to open up new ones. In Vietnam. Who woulda thought that there was cheaper labor than China’s?

A slowly simmering Islamist hatred not just in the provinces but for the sorts of deals being cut with Pakistan… someone isn’t spreading the wealth around, it appears. Threats worked for the Taliban to get cash, my bet is that some bright Islamist private war group will figure the same and start doing fun stuff and asking for protection money. And don’t forget the bombings that they hush up, as well: the Olympic events were just a tiny tip of that iceberg.

Then there are the Triads that have set themselves up in the upper echelon of the PLA and INTEL services, plus helping out State run companies. Can’t go anywhere without organized crime if you are a semi-hemi-demi-commie it appears.

There are lots of rules that China doesn’t play by. Trade is only one of them. The butcher’s bill for the rest will come due and then we will be asking ‘what happened to China?’

Obama is insane to go after Romney on this: the depths of Chinese depravity that is covered up by diplomacy is bottomless until that ugly *splat* at the end. Now the entire panoply of what the US hasn’t been holding China to can start to dribble out… Chinese water torture. You coulda done something, Barry young feller me lad, but you decided to play games and go golfing, instead.

One of his first tax increases was the 30% tariff he put on tires made in China. I believe it was September 2009. The price of the BF Goodrich tires for my F150 went up $100 each the next day. Total sop to the unions.

DanMan on May 25, 2012 at 11:28 AM

Yep. I’m all for Red China playing fair, but that doesn’t mean using government to support obsolete and greedy unions.

“As Knox notes in his report, Obama has come under considerable pressure to define China as a currency manipulator, a charge on which everyone agrees, but which the Obama administration has avoided thus far.”

Because the US is a currency manipulator as well. “Quantitative Easing” and activities by the Fed are designed to debase our currency in parallel. By the way, Switzerland, Japan, and any number of other countries have been manipulating their currency over the last two years also.

That’s because everyone is trying to debase their currency to juice exports rather than dealing with the fundamental issues of restructuring the economy at home. It won’t work, because competitive devaluation by everyone can’t accomplish anything, and will surely “blow-up” in unanticipated but spectacular ways.

More immediately, though, the gains in some industries by doing so are offset by the inflationary costs introduced elsewhere, as well as the punishment of savers over spenders, so any “gains” in jobs in one area are offset by the impoverishment of citizens overall and elsewhere in the economy.

As a simple example, look at how articifially high prices in sugar in the US because of the threat of cheap imports, costs consumers money and drives candy manufacturing out of the US. The “problem” of cheap refined sugar from overseas hurting “domestic” refiners (whether its cheap because of labor, currency or other) isn’t a problem. And by the way, in many cases the manufacturers are merely moving to Canada (not China) based on their more open trade. Jobs are lost in equal or greater proportion when you increase the prices of imports by impeding free trade.

Romney’s trade war rhetoric is not a solution, unless he is also serious about not debasing the US dollar, and criticizing the worldwide tendencies of governments to debase their currencies.

Finally, purchase of Treasuries comes first and foremost as a result of trade, not as a creditor and investor per se. The dollars paid to China as a result of trade have to go somewhere.

For more articles on this topic from a free-market, Hayek-ian point of view, read Mike Shedlock. He has a number of articles, here is one place to start on competitive devaluation:

By the way, the notion of currency manipulation to keep the yuan undervalued is open to devate. Jim Chanos, equally respectable investment world luminary has made the case a number of times that the Yuan is overvalued. I can’t find all the links discussing it, but here is one:

When it came time for the Michigan Republican Primary, my first choice, Rick Perry had just dropped out. That left only two possibilities for me: Romney and Santorum. I decided to vote for Mitt Romney because I thought his experience as a business executive would make him the most formidable opponent against Barack Obama. I also thought of the two men Romney would the least likely to back down from Obama’s attacks.

Looks like Team Romney has really gotten inside Team Obama’s heads on this one.

Romney has put together an effective team to go against the wish-casters and bullshit artists, liars like Burton and thugs like LaBolt, that Obama and Axelrod have assembled. It isn’t going to be as easy for the Obama crew as it was last time against McCain’s brilliant team led by Steve Schmidt and Nicole Wallace.

Do we know if Romney or one of his advisers ever attended the Army or Navy War College? This is Combat 405, and Obama is doesn’t know how to deploy his forces.

BobMbx on May 25, 2012 at 12:02 PM

I’ve seen hints of the ooda loop in the way Romeny’s campaign has respond. Hilary Rosen gives a throw away line of snark about Ann Romney never having held a job and two hours later BOOM! Ann Romney is tweeting about it and Obama spends the next two news cycles undoing the damage done to the war on women meme. Axelrod makes some stupid comment about transporting dogs and BOOM! Next few news cylces include jokes about Obama’s dog eating days from his very own book.

Obama’s weapon is Jay Carney. That’s like fighting with one arm tied behind your back. Add to that Obama’s thin skin for criticism, and this general election could get downright fun to watch.

HoosierStateofMind on May 25, 2012 at 12:15 PM

More like sending your sister to confront your tormentors.

For the first time in Jugears life he has to stand on his own feet and take a position, and that is solely due to Romney. Obama has never had to sell himself. I wonder if he’s up to it, or will he wilt away and blame white people for his loss of power for the rest of his life.

I completely agree. What will be interesting is the Obama response to try to take the initiative back. So far, he’s missing the target and Romney’s counterbattery fire is devastating.

“Engage people with what they expect; it is what they are able to discern and confirms their projections. It settles them into predictable patterns of response, occupying their minds while you wait for the extraordinary moment — that which they cannot anticipate.”
― Sun Tzu, The Art of War

Team Obama doesn’t know how to respond. Think about it. This is the first election where they have to present a message. Obama walked into the Senate, by pulling up the divorce records of his opponent. In 2008,well, we all know what happened. This is his first real campaign and he is clueless about what to do. Just like his Presidency.

Right now Romney and his campaign have gotten inside Obama’s OODA Loop. I had thought McCain could have done this given his combat pilot experience, but business took to John Boyd’s ideas quicker than the military,USMC excepted. And it would appear that Romney somewhere along the line experienced the OODA presentation.

Man I have underestimated the Romney campaign. They are pushing all the right buttons.

gophergirl on May 25, 2012 at 11:27 AM

Me too, and coupled with the hundred(s) of attack ads aready in a holding pen…looks like we backed the wrongly inadequate candidates before…There is NO way any of them have this much ammo to shoot back at Axle!

I wonder if much of that is due to having had a tough primary. If so, all the “stop the infighting” crybabies were wrong.

Odysseus on May 25, 2012 at 11:34 AM

EXACTLY! I actually loved each debate…and it has turned out that this was the best way to pick a candidate. What if it would have been one of the others? They have shown that they couldnt go the distance in a fight against Axle, by not even making it past Romney. I shudder to think what would have happened if it had been any one of the others…even tho Romney was my last best hope. Now he is my hope that he is the BEST!

Just like his education speech in Washington surprised the Carney and the rest of the Democratic establishment. There are so many issues that Romney can capitalize on, that the Obama campaign may be in damage control from now to November. (We have budget and debt issues that need to be decided before the election. Romney can hammer Obama for letting it come to this and/or threatening a veto before he even sees legislation coming from Congress.)

Have you seen the latest release from the Romney campaign, it’s in the HA headlines? Oduffer has played 1,710 holes of golf since the immaculation–for the math-challenged, that’s 95 18-hole rounds. Now that the weather is nice, that’ll escalate exponentially.

exactly right on the OODA loop references. Was thinking the same thing, you beat me to it.

First saw Whittle’s take on this back in the short span of time when McCain had lil’ baraka spinning and yelping about lipstick on pigs, before a suspiciously auspicious and beneficial financial meltdown pulled numbnuts’s nuts out of the fire.

Obama has come under considerable pressure to define China as a currency manipulator, a charge on which everyone agrees,

You better be careful what you wish for Ed. Yes China uses a peg which destroys American jobs because it ensures their labor costs will remain ridiculously low, however if China allows their currency to float, then all goods from China, and for us that’s most all everyday items, will see a huge cost increase. It will help to spur American jobs, but it will be a very painful transition, especially for the poor.

You better be careful what you wish for Ed. Yes China uses a peg which destroys American jobs because it ensures their labor costs will remain ridiculously low, however if China allows their currency to float, then all goods from China, and for us that’s most all everyday items, will see a huge cost increase. It will help to spur American jobs, but it will be a very painful transition, especially for the poor.

DFCtomm on May 25, 2012 at 2:18 PM

Not to mention making China the world’s largest GDP nation overnight. That’d be great for American prestige.

China is the main reason we need to move to a National sales tax. Then we could reduce corporate taxes so that our companies can compete with cheap foreign products. Start with a small tax of 1-2%, and as the revenue comes in, use those funds to give tax rebates to manufacturers. Each year the tax can be increased until at least the manufacturing sector is paying little or no tax. With a sales tax everybody selling goods here contributes, and everyone in the USA, citizens, tourist, and illegals contribute.

I am not a fan of China, but calling them a currency manipulator is a lot like the pot calling the kettle black. I don’t suppose that the Fed purchasing hundreds of billions of US debt with money created out of thin air would not be currency manipulation? While China holds over a trillion of US debt, the Fed has exceeded that with their QEx program, that now the Fed is the US’s largest debt holderi. The difference is China used real money and we just printed it. Well actually just pushed some keys on a keyboard.

Secondly, it shows a little of the desperation that has begun to afflict the Obama camp.

Yes. This is an admission of desperation. For them to see their chances going down the drain from the absolute confidence they had a couple months ago, is a very big deal.

They now are seeing what everyone around them has seen for a little while now. Obama himself is probably still in denial. It’s only a matter of time now for his campaign staff to start deserting and or getting invited to leave. At that time he will take charge of his campaign himself.

Team Obama is well aware that he promised REPEATEDLY during his 2008 campaign to re-negotiate or even repeal NAFTA…After he was elected he snickered about his promise calling it “campaign rhetoric.” The rust belt white working class has never forgotten this lie..Obama knows he is in deep doo doo with those voters thus his Mitt is a corporate devil schtick. The China trade issue reminds them of Obama’s betrayal and his lie.